The Supreme Court of India has examined the scope and limitations of a criminal court’s power to alter or review its own final judgment under Section 362 of the Code of Criminal Procedure (CrPC). In a case stemming from a long-standing dispute involving allegations of perjury, a bench comprising CJI B. R. Gavai and Justice Augustine George Masih reiterated that the bar on such reviews is absolute, except for the correction of clerical or arithmetical errors. The Court clarified that this prohibition cannot be circumvented, even under the guise of a “procedural review,” if the grounds for review were known to the parties at the time of the original hearing.
Background of the Case
The dispute originates from a business arrangement between the “Khosla Group” (comprising Mr. R.P. Khosla, Mr. Deepak Khosla, and Ms. Sonia Khosla) and the “Bakshi Group” (comprising Mr. Vikram Bakshi, Mr. Vinod Surha, and Mr. Wadia Prakash) for the development of a resort in Kasauli, Himachal Pradesh. The project was to be executed through a Special Purpose Vehicle, Montreaux Resorts Private Limited (MRPL).
Disagreements led Ms. Sonia Khosla to file a company petition (CP 114 of 2007) before the Company Law Board (CLB) in 2007, alleging oppression and mismanagement by the Bakshi Group. A key point of contention arose when the Bakshi Group, in an application before the CLB, claimed that its directors were confirmed in the Annual General Meeting (AGM) held on September 30, 2006.
Alleging that the minutes of this AGM were forged, Ms. Sonia Khosla filed an application under Section 340 of the CrPC before the CLB, seeking the prosecution of the Bakshi Group for perjury. She later moved the Delhi High Court with a similar application. This matter reached the Supreme Court, which, by a consent order dated May 8, 2014, directed the CLB to decide the main company petition and the related perjury application, and directed the High Court not to proceed with its own perjury case.
Subsequently, the Khosla Group filed another application under Section 340 CrPC in the High Court in 2019, alleging false statements in a counter-affidavit filed by the Bakshi Group in a related contempt petition. The High Court disposed of this application on August 13, 2020, declining to interfere, citing the Supreme Court’s 2014 order that vested the CLB (now National Company Law Tribunal – NCLT) with the authority to decide the disputes.
The Khosla Group then filed a review petition, arguing that the High Court’s 2020 judgment was based on the incorrect premise that the company petition was still pending, when in fact, Ms. Sonia Khosla had withdrawn it on February 7, 2020. Accepting this argument, the High Court, via the impugned order dated May 5, 2021, recalled its judgment of August 13, 2020, and listed the perjury application for a fresh hearing. This recall order was challenged by the Bakshi Group in the present appeal before the Supreme Court.
Arguments of the Parties
The appellants (Bakshi Group), represented by senior counsel, argued that the High Court has no power to review its own criminal judgments under Section 362 of the CrPC, which only permits the correction of clerical or arithmetical errors. They contended that the High Court, despite acknowledging this legal bar, proceeded to recall its final order, which was impermissible.
The respondents (Khosla Group) countered that the High Court was not conducting a “substantive review” on merits but a “procedural review” to correct an order passed under a factual misapprehension. They argued that the court was acting ex debito justitiae (out of a debt to justice) to undo a wrong caused by its factually erroneous observation that the company petition was still pending.
Court’s Analysis and Decision
The Supreme Court bench, in its judgment authored by Justice Augustine George Masih, undertook a detailed analysis of the scope of Section 362 CrPC. The Court reiterated the established legal principle that the provision imposes a complete prohibition on criminal courts from altering or reviewing their judgments once signed.
The judgment stated, “The prohibition is complete and no criminal court can review its own judgment or order after it is signed.”
The Court acknowledged that it had carved out exceptions in rare cases, distinguishing between a “substantive review” (an error of law apparent on the record) and a “procedural review” (to set aside a palpably erroneous order passed under a misapprehension). However, it clarified that these exceptions are limited to situations such as a lack of jurisdiction, fraud played upon the court, or a mistake of the court causing prejudice. Crucially, the Court emphasized that such grounds cannot be raised if they were available to the party during the original proceedings.
Applying this law to the facts, the Supreme Court found that the Khosla Group’s actions did not fall within the narrow exceptions. The Court noted that Ms. Sonia Khosla had withdrawn the company petition on February 7, 2020, more than six months before the High Court’s judgment on August 13, 2020. The ground for recall was, therefore, fully available to the Khosla Group at the time of the original hearing.
The Supreme Court observed that the Khosla Group had, in fact, made an “explicit statement” recorded in the High Court’s judgment that the NCLT was still seized of the matter. The Court deemed the subsequent review application as an “intentional attempt to mislead the court” and an “abuse of process.”
The judgment held: “The ground on which recall was later sought was one that was fully available to the Khosla Group at the time of the original hearing and thus, could have been duly raised but was not so taken.”
Furthermore, the Court ruled that proceedings under Section 340 CrPC are criminal in nature, as their outcome could lead to a criminal trial and punishment. Consequently, they are governed exclusively by the CrPC, and the review petition filed by the Khosla Group under the Code of Civil Procedure, 1908, was “patently not maintainable.”
Concluding that the High Court’s recall order was “antithetical to the law as laid down by this Court relating to Section 362 of CrPC,” the Supreme Court allowed the appeal and set aside the impugned order dated May 5, 2021.
